Emperor’s Clothes Fashions can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 6 million jars of makeup a year. Fixed costs are $2 million a year, and variable costs are $1 per jar. The product will be priced at $2 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40%. What is project NPV under these base-case assumptions? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. What is NPV if variable costs turn out to be $1.20 per jar? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. What is NPV if fixed costs turn out to be $1.5 million per year? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. At what price per jar would the project's NPV equal zero? Note: Enter your answer in dollars, not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.
